DiFabio v. Centaur Ins. Co.

• Decision Date: 06 October 1987
• Docket Number: No. 01496,01496
• Citation: 366 Pa.Super. 590,531 A.2d 1141
• Parties: Joanne DiFABIO, Appellant, v. CENTAUR INSURANCE COMPANY. Phila. 1986.
• Court: Pennsylvania Superior Court

Page 1141

531 A.2d 1141

366 Pa.Super. 590

Joanne DiFABIO, Appellant, v. CENTAUR INSURANCE COMPANY.

No. 01496 Phila. 1986.

Superior Court of Pennsylvania.

Argued June 15, 1987.

Filed Oct. 6, 1987.

Roger J. Harrington, Philadelphia, for appellant.

Margaret A. Wurzer, Philadelphia, for appellee.

Before MONTEMURO, KELLY and CERCONE, JJ.

MONTEMURO, Judge:

Appellant Joanne DiFabio challenges the entry of summary judgment in favor of appellee Centaur Insurance Company. We agree with Ms. DiFabio that the terms of the "special multi-peril" policy of insurance issued to her by Centaur obligate Centaur to cover the loss here in question. We therefore reverse the order of the Philadelphia County Court of Common Pleas and remand for the entry of partial summary judgment in favor of Ms. DiFabio.

Neither party disputes the material facts. Ms. DiFabio owns a laundromat in Croydon, Bucks County. In January of 1983, she obtained from Centaur Insurance Company a "special multi-peril" insurance policy to cover various risks of loss to the premises where the laundromat is located. Centaur agreed in part to insure the premises against "all direct loss" caused by "WINDSTORM OR HAIL,excluding loss caused directly or indirectly by frost or cold weather ... whether driven by wind or not." Cross-Motion for Summary Judgment, exhibit "A" at 2 (emphasis added). The Company added that it would not cover "loss to the interior of the building(s) or the property covered therein caused ... by water from sprinkler equipment or from other piping unless such equipment or piping be damaged as a direct result of wind or hail." Id. (emphasis added). ¹ In December of 1983, during the coverage period of the multi-peril policy, high winds blew the back doors off Ms. DiFabio's laundromat. As a result, water pipes inside the laundromat froze and burst. Although Centaur paid Ms. DiFabio for the loss of the doors, it has refused to pay for any damage to the interior of building. Ms. DiFabio therefore filed this action against Centaur to recover the withheld amounts.

On December 31, 1985, Ms. DiFabio filed a motion for partial summary judgment on the issue of liability. Centaur responded with an answer and a cross-motion for summary judgment. By order filed April 29, 1986, the court entered summary judgment in favor of Centaur and dismissed Ms. DiFabio's action with prejudice. This timely appeal followed.

The sole issue presented by Ms. DiFabio is whether the multi-peril policy obligates Centaur to cover the damage to the interior of the laundromat. Centaur maintains that its policy clearly excludes coverage of losses "caused directly or indirectly by frost or cold weather" and that this exclusion applies to the water-damaged interior. Ms. DiFabio, however, contends that the policy just as clearly covers losses caused by "water from sprinkler equipment or from other piping" when the equipment or piping is "damaged as a direct result of wind." Ms. DiFabio further contends that this language at least renders the policy ambiguous and that the court should have resolved the ambiguity in favor of the insured. We agree.

The rules that govern our construction of insurance contracts are familiar. As a means of fostering stability and predictability in contractual relationships, the common law has assigned to the court the task of interpreting the intent of the parties. See Hutchison v. Sunbeam Coal Corp., 513 Pa. 192, 519 A.2d 385 (1986); Standard Venetian Blind Co. v. American Empire Ins., 503 Pa. 300, 469 A.2d 563 (1983); Gonzalez v. United States Steel Corp., 484 Pa. 277, 398 A.2d 1378 (1979). When the language of the contract clearly reflects the parties' intent, the court must give effect to that language. See Hutchison v. Sunbeam Coal Corp., supra; Standard Venetian Blind Co. v. American Empire Ins., supra; Steuart v. McChesney, 498 Pa. 45, 444 A.2d 659 (1982). When the language is ambiguous, however, the court must resolve the ambiguity against the insurer, as drafter of the contract, and in favor of the insured, who typically lacks bargaining leverage regarding the terms of the coverage. See Rusiski v. Pribonic, 511 Pa. 383, 515 A.2d 507 (1986); Standard Venetian Blind Co. v. American Empire Ins., supra; Mohn v. American Cas. Co. of Reading, 458 Pa. 576, 326 A.2d 346 (1974). Of course, this general rule of construction does not absolve the court of its obligation to consider the circumstances from which the written instrument sprang. If extrinsic evidence will aid in the resolution of ambiguities, the court must look to it. If, moreover, the extrinsic evidence raises disputed issues of material fact, the court must refer those issues to the fact finder. See Hutchison v. Sunbeam Coal Corp., supra; Gonzalez v. United States Steel Corp., supra. Only in the absence of useful extrinsic evidence will the court construe ambiguous contract language against the drafter as a matter of law. See Hutchison v. Sunbeam Coal Corp., supra 513 Pa. at 202 n. 5, 519 A.2d at 391-92 n. 5; Restatement (Second) of Contracts § 206 comment a (1981).

The threshold determination of whether a writing is "ambiguous" necessarily lies with the court. See Hutchison v. Sunbeam Coal Corp., supra; Vogel v. Berkley, 354 Pa.Super. 291, 511 A.2d 878 (1986). In making that determination, the court must assess the writing as a whole and not in discrete units. See Musisko v. Equitable Life Ins. Co., 344 Pa.Super. 101, 496 A.2d 28 (1985); Huffman v. Aetna Life and Cas. Co., 337 Pa.Super. 274, 486 A.2d 1330 (1984). A contract is "ambiguous" if "reasonably intelligent persons ... would differ regarding its meaning." Musisko v. Equitable Life Ins. Co., supra 344 Pa.Super. at 106, 496 A.2d at 31. See also Hutchison v. Sunbeam Coal Corp., supra; Metzger v. Clifford Realty Corp., 327 Pa.Super. 377, 476 A.2d 1 (1984). Thus, we will not allow an overly-subtle or technical interpretation to defeat the reasonable expectations of the insured. See Huffman v. Aetna Life and Cas. Co., supra. On the other hand, we will not convolute the plain meaning of a writing merely to find an ambiguity. See Techalloy Co. v. Reliance Ins. Co., 338 Pa.Super. 1, 487 A.2d 820 (1984).

The multi-peril policy at issue in the present case unquestionably excludes coverage of losses caused "directly or indirectly" by cold weather. The trial court focused entirely upon this "cold weather" exclusion in deciding to grant Centaur Insurance Company's cross-motion for summary judgment. If we were to consider the exclusion in isolation, we would have to agree that Centaur clearly never intended to cover the losses caused by the frozen pipes. The court, however, overlooked the language upon which Ms. DiFabio bases her claim. That language strongly suggests that the multi-peril policy covers losses to the interior of the laundromat caused by water from pipes "damaged as a direct result of wind." The cold weather exclusion and the damaged pipe provision thus appear to conflict under the circumstances of this case. Certainly both the wind and the cold weather contributed to the loss suffered by Ms. DiFabio.

Centaur nevertheless argues that the pipes inside Ms. DiFabio's laundromat were not damaged as a direct result of wind. This argument assumes that the policy covers the risk of loss caused by water from interior sprinkler systems and pipes only if the damage to those interior systems and pipes results from their exposure to or contact with the violent force of high-velocity winds. We cannot agree with so narrow an interpretation of the phrase "direct result." We must give reasonable and ordinary meaning to the words of an insurance contract, unless the parties clearly intended a technical, specialized or otherwise narrow usage. The drafter of the policy, who has better reason to know of uncertainties in the policy language and who can more easily rectify those uncertainties, must either "delineate as precisely as possible the full extent of coverage or bear the consequences for failing to do so." Techalloy Co. v. Reliance Ins. Co., supra at 7, 487 A.2d at 823....